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148 Cards in this Set
- Front
- Back
4 major resources managers must have to operate a business? |
The more info a manager has the lower the risk the decision will be incorrect |
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Difference between Data and Info |
Data is numerical or verbal descriptions Information is Data presented for a specific purpose |
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What is Mis |
A system that provides people with info they need to perform their jobs effectively |
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What is a Financial Manager |
Manager that study's the firm's debts, cash flow, and financial statement |
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Operations Managers |
Concerned with sales levels, inventory, availability, and cost of resources required to produce products and services |
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Marketing Managers |
Information on their produce mix, comptetion |
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HR Managers |
Wage levels, benefits, and union activities |
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Information by HR Managers should be... |
Reliable, Accurate, and Current |
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Why is Social Media Important? |
Represents an online interaction allowing businesses and people to communicate and share ideas, personal info, and info about product and services |
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**A Culture of Participation** how many adults use some sort of social media online platform... Give an example |
2/3 of adults use online social media like Facebook, Linked-In, and or Twitter to stain in touch with friends and family |
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Why do Businesses use social media? |
To share info about their products and services Improve customer service |
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Name an example of Businesses using Social Media... |
Facebook has 850 million users, Facebook adds and develops contest to get people to "like" them |
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Why do Companies use social media... |
1)Connect with customers 2)Listen to its main stockholders 3)Provide another means of customer service 4)Develop content valuable to customers 5)Engage customers in product development and formation 6)Ratings and review sites are based on the idea that people trust the opinions of others when it comes to purchasing goods and services |
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What is a blog? |
A website that allows companies to share info about products and services |
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How is Linked-In different than most social networking sites? |
It is for professionals used to recruit employees worldwide |
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What are the internal forces tat create a successful E-Business? |
Management decisions, Human resources, organization structure, Green IT, Planning Activities, Info Database, Available financing |
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What are the External Forces that create a successful E-Business? |
Legal Issues, Society, Economy, Technology, Political forces, Demographic Factors |
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What is an E-Business? |
An organized effort of individuals to produce and sell products for a profit and also a service |
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Models of E-Business |
B2B: Business to Business --> Internet connection between two businesses B2C: Business to Consumer --> Amazon.com |
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What are Ethics? |
Cookies that can track where the user goes on the internet and measure how long the user stay sat a particular web site. |
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Why so some think cookies are an invasion of privacy? |
Your moments and clicks on the internet are being monitored |
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Name a type of internet crime.. |
Computer Viruses |
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**What can a firm's website do for them?** |
**A firm's Website may lead to INCREASED sales in its physical stores** |
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What is an Asset? |
Listed on the balance sheet from the most to the least liquid |
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What is Liquidity? |
The ease with which an asset can be converted into cash |
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How long dues current assets take to be converted into cash |
1 year or less |
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What are some examples of current assets? |
Cash, stocks, bonds, allowance for doubtful accounts |
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What is a fixed asset? |
Assets held on used for a period longer than 1 year |
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What is Depreciation? |
Appreciating the cost of a fixed asset over the period of which it will be used |
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What is an intangible asset? |
Does not exist physically but has a value based on the rights it confers to the company |
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What are current liabilities? |
Debts to be paid in one year or less |
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What are Accounts Payable? |
Short term credit obligations |
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What are Notes Payable? |
Obligations secured with promissory notes |
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What are salaries and taxes payable? |
Getting paid with a pay period system |
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Long term liabilities? |
Debts that need not be repaid for at least one year |
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What is an income statement? |
A summary of a firms revenues and expenses during a specific accounting period |
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What is the formula for Net Income? |
Net Income= Revenues - COGS - Operating Expenses |
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What is Revenue? |
Dollar amount earned by a firm from sales of goods and services |
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What are gross Sales? |
Amount Sold during one accounting period |
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What does COGS Stand for? |
Cost of Goods Sold |
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What is the formula for COGS |
COGS= Beginning + Net - Ending Inventory Purchases Inventory |
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What is an example of the COGS Formula? |
COGS = 40,000 + 335,000 - 41,000 |
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What is the formula for a Gross Profit |
Gross Profit = Net Sales - COGS |
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What are operating Expenses? |
All business cost other than COGS ex... Selling expenses, marketing activities |
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What is the formula for Net Income? |
Net Income = Revenues - COGS - Operating Expenses |
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Why is Accounting Important? |
Keeps score if the company or business is winning or losing |
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What is Accounting? |
The process of systematically collecting, analyzing, and reporting financial information |
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Examples of what Accountants do... |
How much profit did a business earn last year? How much tax does a business owe to the IRS? |
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How much cash does a business have to pay lenders and suppliers? |
*ACCOUNTING PROVIDES THE ANSWERS* Whether winning or losing |
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Why is an Audit important |
People must "trust" the numbers to improve and verify the accuracy, business rely on audits conducted by public accounting firms |
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What is an Audit? |
An examination of a company's financial statements and the accounting practices that produced them |
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What is the purpose of an audit? |
Make sure the financial Statement have been prepared in accordance with GAAP |
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What Does GAAP stand for? |
Generally Accepted Accounting Principles |
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What is the Gaap? |
An accepted set of guidelines and practices for companies reporting financial info and counting professions |
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** Why are audited statements important?** |
Loan Money Acquire Goods and Services form suppliers Find Investor financing Prepare documents required by government agencies |
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What is Managerial Accounting? |
Provides managers and employees with the information marketing and operating activities |
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What is Financial Accounting? |
Generates Financial Statements and reports for interested people outside the organization |
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What is a Private Accountant? |
Employees by a specific organization |
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What is a Public Accountant? |
Works on a fee basis for clients |
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What does CPA stand for? |
Certified Public Accountant |
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What is the basis for a firm's balance sheet? |
The Fundamental Accounting Equation |
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What does the Fundamental Accounting Equation relationship? |
relationship between a firm's assets, liabilities, and owner's equity |
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Where is the Balance Equation found? |
Under the Balance Sheet |
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What is the accounting equation? |
Assets = Liabilities + Owner's Equity |
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What are some examples of assets? |
Cash, inventory, equipment, real estate |
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What are some examples of Liabilities? |
Debt, borrowed money, owes others that must be repaid |
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What are some examples of stockholder's equity? |
Difference between total asset and total liabilities what would be left for the owners if the firms assets were sold and the money used to pay off liabilities |
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What is another name for stockholder's equity? |
Net worth |
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What is the difference between Assets and Stockholder's Equity? |
Assets are what we own, Stockholders Equity is what we owe |
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What would you prefer to have more of? |
Assets, so we could have a positive net worth |
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What is another name for the balance sheet? |
Statement of Financial Position |
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What is a balance sheet? |
Summary of the firm's assets, liabilities, and owners equity accounts at the end of a specific accounting period |
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Where are assets listed? |
The balance sheet |
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How are assets placed? |
From most to least liquid |
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What are prepaid expenses? |
Insurance premiums already our far in advance but not yet used |
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What is Merchandise Inventory? |
Value of goods on hand for sale to customers |
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What are notes receivable? |
Promissory notes from customers |
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What are account Receivables? |
Results from customers making credit purchases paid in 30-60 days |
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What is financial Management? |
The ability t borrow money or obtain money from the owners of a business is necessary for the efficient operation of a business firm and our economic system |
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Debt Capital V. Equity Capital |
All activities concerned with obtaining money and using it effectively |
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What is short term financing? |
Money will be used for one year or less |
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What is Long Term Finance? |
Money being used for longer than one year |
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What is a budget?
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Financial statement that projected income and expenditures over a specified future fluid |
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What are unsecured Financing? |
Not labeled by collateral |
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Trade Credit |
*80-90% do not repay, involves trade and credit |
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2/10 net 30 |
does not require payment after delivery |
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Unsecured Bond Loan |
Short term loans to business at interest rates that vary with each borrowers credit rating |
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Prime Interest rate |
Lowest rate charged by a bond for short term loans |
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What is a statement of cash flow? |
Illustrates how the operating, investing and financing activities of a company affect cash during an accounting period |
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What does the statement of cash flow focus on? |
Focuses on how much cash in on hand to pay the bills |
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What does the statement of cash flow provide? - Add Examples |
It provides info concerning the company's cash receipts and cash payments |
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What is the statement of cash flow organized around? |
Operating, Investing, and Fincancing |
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What is a financial Ratio? |
A relationship between two elements of a firm's financial statemets |
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What are numbers ? |
Numbers are data that provide information for business |
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What is the formula for profit |
sales-expenses=profit |
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What is a ratio? |
Ratio is a relationship, percent profit in our rates of sales |
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Profitability Rations |
Return on sales= Net income after taxes/netsales ex: $30,175/451,000 =0.067 or 6.7% |
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What does the profitability rations indicate? |
Indicate how effectively the firm is transforming sales into profits |
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What is the average return on sales for most business is... |
4-5% |
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Return on Equity formula? |
Net Income After Taxes/ Owner's Equity= $30,175/230,000=0.13 or 13% |
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What does the return on equity indicate |
It indicates how much income is generated by each dollar of equity |
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Formula for Earnings Per Share |
Earnings Per Share = Net Income After Taxes/Common Stock Shares |
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What is the best indication of a corporation's success |
Earnings Per Share |
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Who evaluates a firm's ability to pay its current liabilities? |
Permit Management and Lenders |
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What is Working Capital |
How much would reman if a firm paid off all current liabilities with cash and other assets |
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What is the formula for Working Capital? |
Worming Capital = Current Assets - Current Liabilities |
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What is the best indication of a corporation's short term success |
Working Capital |
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What is the formula for Current Ratio |
Current Ratio= Current Assets/ Current Liabilities |
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How much is an asset for every current liability |
2.60 for every 1.00 |
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What is the average current ratio |
2.0 |
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What is an account ratio? |
How many times a year a company collects its account receivables or sell its inventory |
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What is the formula for Accounts Receivable Turnover? |
Accounts Receivable Turnover= Net Sales/ Accounts receivable |
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Which statement are net sales on? |
Balance Sheet |
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Formula for Inventory Turnover |
Inventory Turnover = COGS/Average Inventory |
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What does the inventory turnover do? |
Indicates the number of times a firm sells its merchandise inventory in one year |
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What is the average inventory for most firms |
9 times a year |
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What is the formula for Debt to Owner's Equity Ratio? |
Total Liabilities/Owner's Equity |
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What happens when you deposit money? |
You receive interest |
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What happens when you borrow money |
You pay interest |
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How does a bank make money |
by lending money |
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When does responsible borrowing enable |
Both businesses and individuals to meet specific needs |
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What is money? |
Anything society uses to purchase products and services |
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What do we use and call anything to purchase goods and services? |
We use metal coins and paper bills which are called currency |
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Define the medium of exchange |
anything accepted as a payment for products, services, and resources |
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Define Measure of Value |
a "yardstick" to assign values to, and compare values of products, services, and resources |
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What is the common denominator used to compare products and decide what we will buy |
Measure of Value |
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What is a store value? |
Money is a means of accumulating and retaining wealth |
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What is affected by inflation? |
Value that is stored as money |
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Define inflation |
A general rise in the level of prices |
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Example of Inflation |
A stereo could cost $1,000 today and could be $1,025 next year... money lost its purchasing power |
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What is the consumer price index? |
Measured the changes in prices of a fixed basket of goods, purchases by a typical consumer including food transportation housing clothing medical care recreation education communication and other goods and services |
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What is the base amount for the CPI |
100 |
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How was the base amount for the CPI established? |
By averaging the cost of the items included in the CPI over 36 month period |
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EXAMPLE OF CPI |
In feb 2012 it took $228 to purchase the same goods that could have been purchased for $100 in the base period saving money for a car won't go as far when prices raise |
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What is M1 supply of money? |
A narrow definition and consists of currency, demand deposit |
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What is M2 supply of money? |
M1 Plus savings accounts, certain money market securities, and Certificates of deposit of less than 100,000 |
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Who tends to focus on m1 |
Economists, politicians, and bankers |
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What will people do if they print more money? |
save pay off debt spend |
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Why do prices go up after a drastic increase in the money supply? |
If they have more money they will spend some and retailers will be forced to raise prices or run out of product bc they do not have capacity to create extra product |
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What is inflation caused by |
supply of money goes up supply of goods go down demand for money goes down demand for goods goes up |
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If the supply of goods increased what would happen? |
Supply of money going up and supply of goods going down could balance each other out and we could avoid inflation |
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When would suppliers produce more goods? |
when wage rates and price of inputs would not increase |
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Define demand deposit |
an amount on deposit in a checking account |
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define time deposit |
an amount on deposit in an interest bearing account or a "certificate deposit" the bank will pay the depositor a guaranteed rate of interest on money left on deposit for a specified period of time |
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How does the Federal reserve system affect me |
Impacts the interest rates you pay for loans credit cards |
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define discount rate |
the interest rate the fed charges for loans to member banks |
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what can provide an incentive for both business firms and individuals to buy G&S which lead to economic wealth (opposite effect) |
Discount Rate |
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What should higher rates do? |
Hopefully sustain economic growth while controlling inflation |